Are prefab homes killing the construction industry?

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Discovery

The worldwide recession that rocked the global economy in 2007 didn't do anyone much good, but the construction industry was hit perhaps the hardest. In a 2010 report, the U.S. Bureau of Labor Statistics predicted that the construction industry would grow 19 percent through the year 2018. However, as of early 2012, unemployment rates in the construction industry were double the rates of overall unemployment in the United States, and industry experts worry that the public sector's hesitancy to invest in long-term construction efforts could keep it that way [source: ACG of America].

However, that hasn't translated into sales for prefab homes. When the economic crisis hit, people didn't buy cheaper homes -- they just didn't buy them at all. The U.S. Census reported that placements of prefab homes dropped from 112,400 in 2006 to 94,800 in 2007, during the beginning of the U.S. housing crisis. They dropped even further to 80,500 in 2008; in 2011, only 46,000 prefab homes were shipped in the U.S. [source: Beers].

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Despite their cost effectiveness (and some media buzz, largely thanks to Dwell Magazine), industry insiders don't see prefab homes as a threat: They carry too much of a stigma, and it's just not worth it for the majority of the home-buying population who want to build their own homes [source: Kusmiersky].

But there's still a place for prefab in the modern construction industry. Niche markets for prefab, even in the luxury sector, are popping up in the United States. And for those who value frugality over aesthetic freedom, prefab will continue to be a welcome alternative to traditional housing. The environmentally friendly aspects of prefab housing -- it creates less waste, for example, and is often made from recycled materials -- continue to attract green-minded folks around the country. And in a pinch, prefab often comes to the rescue: In the Hurricane Katrina-ravaged American South, prefab has seen a resurgence.

So while prefab homes aren't killing the construction industry, they're certainly beginning to make a name for themselves. And if they keep getting greener and more luxurious, they may yet win over the construction purists in the American market. Read on for lots more information about the prefab industry and where it could be headed.